When I get older, losing my hair, many years from now

July 21, 2015 David Piltz

The government’s “pension revolution” was the subject of an Association of British Industry (ABI) press release to coincide on 14 July with 100 days since the pension freedoms came into force. The ABI has found those with smaller pots seem to be cashing them out, and that £1.8bn in total had been released from pension pots in the first 100 days. A report in the Daily Mail pointed out this meant £30 million is being cashed every day at a rate of £1.25 million an hour.

Our own research shows that requests for transfer values are up by 37% on 2014 figures, and that in June of this year transfer out payments were over double what they were in January. Early retirement quotations in June are 75% up from the 2014 average, and year on year June’s early retirements are 63% up on the same month last year. Total retirements, for the three months from April to June 2015, are 33% higher than the same period in 2014.

There is little doubt that those at or around pension age are making the most of the new flexibilities, and indeed the Treasury may have underestimated how much was going to be cashed out of pensions. This is good news for the Treasury in the short term with increased taxation now, but of course that means long term less money for future Chancellors. There is a risk, however, that the reforms are proving too popular, and that long term pensioners will either make bad investment decisions or run out of money. Will their pension money still feed them when they are eighty-four?

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